Charity demands tax havens action

Coins and notesTwo thirds of all the subsidiary and associate companies of the UK's 100 biggest publicly-listed businesses are registered in tax havens, according to research by a charity.

ActionAid - which fights against poverty around the world - said despite a promised government crackdown on tax havens and scandals over tax avoidance, the number of FTSE100 companies with offshore havens has not dropped.
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It called upon David Cameron to tackle the issue at the G8 summit in June, and said the world's poorest countries were suffering because their wealth was being "siphoned" away.

The charity's analysis of the FTSE100's subsidiaries, joint ventures and associated companies were compared to similar research released 18 months ago. It found the number of FTSE100 multinational groups with companies in tax havens - 98 - is the same as it was in October 2011, and ten of them have their headquarters in tax havens - up from nine in 2011.

The study revealed 78 of the FTSE100 do business in developing countries, and every new entrant to the FTSE100 since 2011 has tax haven companies. Nearly 9,000 the FTSE100's 22,000 overseas companies are located in tax havens, and while the total number of overseas companies decreased since 2011, the proportion of those located in tax havens rose from 37.8% to 38.2%.

ActionAid said tax havens were allowing multinational companies and wealthy individuals to drain billions of pounds from poor countries.

Mike Lewis, the charity's tax justice policy adviser said: "Tax havens are one of the biggest hidden obstacles in the fight against global poverty. Poor countries lose an estimated three times more money to tax havens than they receive in aid each year - money needed to build roads, fund schools and finance developing countries' own fight against hunger and poverty.

"Four years after G20 leaders promised an end to tax havens, tax haven structures are near-universal amongst the UK's biggest multinationals. Now, with David Cameron promising action on tax havens at this year's G8, the problem is on the UK's doorstep. The UK is responsible for 1 in 5 of the world's tax havens - that's more than any other country."

The ActionAid researchers found 58% of FTSE100 banks' overseas companies were in tax havens - 1,780 - and almost a third of the countries in which Ftse100 banks operated were developing countries, yet they have 13 times as many companies located in tax havens as in developing countries.

ActionAid said while it is not accusing FTSE100 companies of tax avoidance or evasion, its findings highlight the extent of multinationals' operations in jurisdictions that can provide substantial tax advantages and help obscure information.

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Charity demands tax havens action

Many celebrities have gotten smacked down for failing to paying taxes. Wesley Snipes actually landed in prison for his $17 million unpaid tax bill, while Nicolas Cage owed a seven-figure amount to the IRS. A host of others, including Lindsay Lohan, Pamela Anderson, and Christina Ricci, have faced liens or tax bills for more modest -- yet still sizable -- sums.

The two main reasons for us ordinary folks getting stuck with a big tax bill are that your paycheck withholding needs changing or that you have outside income that comes without having taxes withheld. In either case, even if you can't afford to pay when the bill comes due, ignoring the problem will eventually land you in an even bigger heap of trouble. Instead, take advantage of IRS programs that let you make affordable installment payments over time.

Part of what put Wesley Snipes behind bars was his conviction on three counts of failing to file tax returns by their filing date. In part, he relied on a bogus theory that all income taxes are unconstitutional as justification for his actions.

But a much more common problem many people run into is that they can't afford to pay their tax bill right away. The mistake they often make is to assume that they shouldn't file a return at all if they can't pay.

In reality, the penalties for not filing your taxes are much more severe than if you file but can't pay your taxes all at once. So even if you don't have the money to send with your return, go ahead and file. It'll save you a ton of money -- and possibly jail time -- in the long run.

AccountingWEB recently took a look at some of the great swag that celebrities received at the Academy Awards. With sponsors handing out goodies including everything from jewelry to exotic safaris, the gift packages added up to as much as $75,000 in value. But the recipients have to report it all as taxable income.

You may never be so lucky, but even more modest prizes often get reported to the IRS. If you get a Form 1099 reporting the value of something you received as a prize or award, not including it on your tax form could trigger a red flag at the IRS.

One allegation that Nicolas Cage raised regarding his tax problems was that his business manager mishandled his funds and caused big losses that destroyed his finances. Similarly, Martin Scorsese and Al Pacino both blamed convicted adviser Kenneth Starr for their tax woes. Starr went to prison for fraud and theft from clients.

Still, no matter where you go or how much you spend for tax preparation, you bear final responsibility for making sure your tax returns are accurate. Reputable accountants will reimburse you for any penalties and interest that result from mistakes they make, but don't count on them.

Instead, make sure you understand the positions your tax pro takes so that you can defend them if a question arises.

As you look at the hijinks of your favorite celebrities, be sure not to make the same tax mistakes they made. With a little common sense and some planning, you can learn from celebrity mishaps the easy way.

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